cannabis trends

Cannabis Trends 2019 overview: CBD, media and distribution

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Last week Green Market Report and AxisWire released 2019 edition of its yearly “Cannabis Trend” report which covers the main trends and tendencies on the cannabis market. 

Valuation420 chose the most interesting ones: CBD products, focus on branding and marketing, consolidation of cannabis media, distribution business and multi-state cannabis operators, – and is sharing the key outtakes with you.

Cannabis branding and marketing matters – more than ever 

In 2019, simply producing cannabis is not enough to successfully sell it. The variety of supply and the growing number of competitors force cannabis companies to invest in developing or acquiring brands.

As the legal cannabis industry overcomes the scarcity in supply, consumers are more prone to choosing products and brands that “click” with their lifestyle, their values and identity. 

This trend is confirmed by huge investments in brand-oriented cannabis companies like Coda Signature and Canndescent, as well as strategic partnerships between marijuana producers and other lifestyle-oriented brands (see: Tilray $100 million revenue sharing agreement with Authentic Brands Group that owns Airwalk, Juicy Couture and other famous companies). 

2019 is the year of CBD 

The leading cannabis trends this year were marked by several huge acquisitions and investments in CBD space, like Tilray acquisition of Manitoba Harvest for C$419 million. 

Cannabidiol (CBD) is a chemical compound of cannabis that, unlike its fellow THC, is devoid of psychoactive properties. CBD is starting to be recognized for its pain relief, anti-anxiety and depression properties, as well as alleviation of cancer and other serious illnesses symptoms. The market has seen an influx of new CBD-based products like dietary supplements, skincare, CBD-infused drinks and foods. 

Whether the trend will thrive depend to a large extent on how U.S. Food and Drug Administration will decide to regulate CBD – as a nutritional supplement, or as a pharmaceutical ingredient. The latter would be much less advantageous for the cannabis industry due to much stronger regulations that would apply. 

In the best case scenario, however, the CBD market is expected to surpass $20 billion by 2024, not lagging much behind THC, according to BDS Analytics and Arcview Market Research

Consolidation of cannabis media

One of the hottest cannabis trends this year – media consolidation is led by the cannabis media giant High Times that has been aggressively acquiring cannabis media in Europe and the U.S.: Green Rush Daily for $7 million; Dope Magazine for $11.2 million; Spannabis, the European Union’s largest Cannabis industry event for $7 million. 

High Times’s particular case is driven by the company’s desire to look more attractive before its IPO, but it also kickstarts the trend of consolidation in the cannabis media. So far, most of the money going to cannabis is poured into cultivation, extraction, and brands. But it’s about to change, uncovering the immense potential for investment in cannabis media.

Distribution as a business: catering for cannabis producers

The recent years have seen a rise in specialized cannabis companies: instead of trying to cater for several niches, startups find one particular thing and focus on doing it best on the entire market. This includes cannabis distribution – something even the highest quality product won’t make it without.

Cannabis distribution companies are gaining their momentum in the U.S., especially in California, where flexible cannabis regulations allow cannabis licensees to vertically integrate and act as their own distributor. A distributor can package, repackage, and label cannabis products without an additional license, which makes it easy for brand to work with them to deliver their products to the consumer.

There are nearly 150 licensed cannabis distributors in California at the moment. The leading companies include: 

  • Nabis Distribution (handles some of the largest cannabis brands in California, including Canndescent, THC Design, STIIIZY)
  • Indus Holdings Inc.
  • RISE
  • Lbs Distribution
  • Claybourne Co.

Multi-state cannabis companies

In 50 different states in the U.S., 50 different sets of cannabis rules apply. The 2018 Farm Bill legalized hemp cultivation on the federal level, but allowed each state to pass their own laws regarding the substance. Which they did, making it impossible for cannabis companies operating in multiple states to rely on unified, simple regulation. 

To compete on the increasingly different regulatory landscape across the country, a company needs the money and resources. Only a few have got what it takes: MedMen Enterprises that operates in 6 U.S. states, Green Thumb Industries (11 states) and Acreage Holdings (18 states).

These companies structure themselves as holdings with separate subsidiaries holding licenses in individual states. They share intellectual property, equipment, and staff, but aren’t allowed to transport cannabis products across state lines.

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